The Failure of Succession

The financial services industry is acting like it has nothing at stake by ignoring the radically different relationship management needs and skills of Millennials and GenXers.

There is a critical and perhaps not-so-obvious connection between succession planning, relationship management and social media.  Let me explain.

Succession planning is, arguably, the most challenging issue facing our business today.  By now, most long-time industry professionals know from personal experience that the vast majority of advisors have no viable succession plan.  That's because the vast majority of advisors have no successor. There are several reasons why the vast majority of advisors have no successor.  One of the most compelling reasons is that there is an inadequate pool of successors.  There is an inadequate pool of successors because the advisor professional demographic is highly concentrated at the upper end of the age range, i.e. there are an insufficient number of GenXers (born 1965-1984) to succeed retiring Baby Boomer advisors (born 1946-1964).  And there are even fewer Millennials (born 1985-2004) to succeed upwardly-mobile GenXers.

There are at least three reasons for the poor upstream talent pool, all associated with legacy issues:  1) a compensation structure for young professionals that is structurally deficient and/or functionally obsolete; 2) an inadequate commitment to training and professional development; and 3) the fundamentally conservative image of the industry, especially its limited view of the importance of social media as a critical relationship-management resource.

To be clear, the warm embrace of social media by influential baby boomers is necessary though not sufficient to transform the image of the industry in the eyes of a new professional generation.  However, attitudes toward social media are probably the easiest and least expensive factor to change. What's required is for financial services professionals and their associated firms to understand the principles, power and potential of social media because the likes of LinkedIn, Twitter and Google Plus may turn out to be the future of relationship management in the financial services business.  With greater clarity from the regulators and the availability of increasingly cost-effective technology for successful supervision, more companies and more individuals are venturing more confidently into the new relationship management paradigm of social media.

More financial professionals each day are using more social media platforms more often to build their brands through thought leadership and other value-added messaging.  Those who use social media regularly report that their efforts are proving increasingly effective as an important aspect of new business development and client retention.  There is an increasingly-clear likelihood that social media will be the future of mastering the all-important success drivers of identifying, qualifying, creating, building and retaining value-added relationships with clients and the financial professionals who serve them. 

And since financial services is, fundamentally, a relationship-driven business, social media or its absence will have an increasingly profound impact on the profile of those professionals who must be recruited, developed, challenged, rewarded and retained as the backbone of the industry’s business continuity plan.

Neil Wernick is a globally-experienced executive and 20+ year veteran of the financial services industry.  He is a passionate speaker and executive coach engaged with some extraordinary people to achieve strategic, sustainable and positive impact through communications, brand evolution and relationship management.